In a Booming Cryptocurrency Market, How Does Each Coin Stack Up?
Cryptocurrencies are a rather new entrant into the fintech industry, and first came onto the scene with bitcoin nearly ten years ago. This pioneering token has built itself a social standing which remains unrivaled despite its many competitors.
Even institutions are increasing their own levels of participation, following the listing of mutual fund products designed to track their value and an upcoming launch of futures contracts.
These decisions come on the coattails of the investing public’s demand for crypto assets in a more reputable, legitimate trading environment. All the signs point to cryptocurrency becoming a big part of our future, which further benefits the crypto market’s biggest players. When cryptocurrency investing and trading, knowing the differences between these coins is key.
Bitcoin was developed and released in 2008 by Satoshi Nakamoto, the rumored individual or group behind the whitepaper that focused on cryptographic hashing and the power of the blockchain architecture underlying its design. The digital coin was launched in 2009 as the first decentralized payment method, and it was accompanied by the blockchain network to run bitcoin itself. The latter was developed to provide clients with a transparent, safe, and self-sufficient way to ensure its survival.
Bitcoin, however, did not limit itself to the cryptocurrency realm, and soon became an asset that could be traded for flat currencies like the US dollar and Euro. Our current situation was born, where traders prefer crypto investments to other assets due to their high degree of intraday volatility and separation from traditional markets. Bitcoin’s name has brought it huge increases in price, yet it remains in high demand despite its uphill battle to replace cash.
Bitcoin cash was created due to a disagreement between bitcoin core and a small group of developers regarding the scaling debate. Bitcoin’s developer team did not want to increase the block size limit to accommodate more transactions and faster processing speeds, instead deciding to adopt SegWit. SegWit is original bitcoin’s software that minimizes individuals’ transactions by moving the data to second layer solutions (still in development). The disagreement resulted in a hard fork during August, when holders were first introduced to bitcoin cash.
This token differed from bitcoin by having immediately increased the block size limit to 8MB, so the blockchain could accommodate more incoming data and improved processing speeds. Furthermore, the younger offshoot incorporated the Emergency Difficulty Adjustment (EDA) algorithm, so transaction verifications are kept short and cheap. EDA automatically decreases the mining difficulty to incentivize miners to participate and perpetuate such a system. Although in principle it operates very similarly to bitcoin, the ultimate purpose of bitcoin cash is greater transactability, improving its position as a currency instead of an investment asset, and therein is the impetus for its healthy price.
While each cryptocurrency has its own unique attributes, attractive advantages, and benefits, the industry is still young to the extent that a dominant solution has yet to surface. However, the benefits of such a diverse ecosystem mean that the space will continue to evolve and innovate, helping deliver more powerful solutions to a broader range of participants.